7 Myths About Obamacare, Debunked

As the Republicans are getting ready to repeal and replace Obamacare, the Obamacare apologists are naturally spreading myths about the failed healthcare law to try and intimidate Republicans from repealing it. Here are seven myths about Obamacare and why each of them is false.

1. 20 million people will have the rug pulled out from under them if Obamacare is repealed. This is the most common refrain from Obamacare’s apologists, as they howl about how these 20 million are going to lose health care as a result of Obamacare’s repeal. But as Betsy McCaughey has pointed out in The Hill, the vast majority of these 20 million people are enrolled through Medicaid:

Sixteen million of those who gained coverage are enrolled in Medicaid, the public program for low-income residents. ObamaCare allowed states to expand who could sign up for Medicaid, with the federal government covering the tab. Repeal could result in less federal funding. But no one is pushing to abolish the nation’s health safety net. And states that just expanded Medicaid are unlikely to do a 180 and shrink it. The 16 million are likely safe.

President-elect Donald Trump and other Republicans do propose giving states more flexibility in how Medicaid is run and who’s eligible, which is needed. Federal Medicaid spending has shot up 40 percent in the last three years under the ACA, and research shows all that extra spending is not improving the health of Medicaid patients.

The rest are people who were forced into the Obamacare exchanges after losing their healthcare, and they’re struggling with it:

Technically they’re “covered” but many can’t come up with the cash to see a doctor. It’s true that four out of every five enrollees are getting taxpayer subsidies, but they’re still struggling with exorbitant deductibles — $6,000 per person for the typical bronze plan — and ever rising premiums.

In short, about five million previously uninsured people — not the bogus 20 million — may need help when the law is repealed and replaced. But they may actually benefit from what’s ahead. The individual insurance market has for years been dysfunctional and unaffordable in many states, and Trump is proposing market reforms to lower costs and increase choices for consumers stuck in this market

The 20 million people covered through Obamacare are going to be fine even if Obamacare is repealed in its entirety.

2. Obamacare has saved lives. Sen. Bernie Sanders (I-VT) has claimed there will be 36,000 annual deaths if Obamacare is repealed, but the Manhattan Institute’s Oren Crass notes that there haven’t been any lives saved under Obamacare since most of the newly-insured have done so through Medicaid, and “studies of Medicaid do not find the same positive effects on mortality sometimes seen in studies of private insurance,” either showing no effect or a negative effect on mortality. In fact, Crass points out that “mortality in 2015 rose more than 50 percent faster in the 26 states (and Washington, D.C.) that expanded Medicaid during 2014 than in the 24 states that did not.”

3. If Obamacare is repealed, people with pre-existing conditions won’t have access to health care. One of the biggest myths about the pre-Obamacare health care system is that people with pre-existing conditions were constantly being denied insurance. According to Legal Insurrection, prior to Obamacare 35 states offered high-risk insurance pools for people with pre-existing conditions to purchase health care, and most of the states that didn’t had pre-existing conditions mandates similar to what Obamacare requires.

4. Red states that have been able to reject various aspects of Obamacare are responsible for higher premium increases. Los Angeles Times columnist Michael Hiltzik made this claim in an October op-ed, arguing that “states that fully embraced Obamacare will see increases of 18.2%. Those that fully resist will see increases of 29.8%.”

By “fully resist” Hiltzik is referring to states that didn’t expand Medicaid and form their own exchanges as well as allowing health care plans that don’t meet Obamacare’s standards to be grandfathered in.

This is a classic example of a post hoc fallacy. While it might be easy to think that states that have resisted Obamacare are experiencing a rise in premiums because of their unwillingness to fully implement the law, the higher premiums in such states is actually due to a matter of basic math.

“So if you’re in a lightly regulated state today, all of a sudden it’s going from a lightly regulated system to a heavily regulated system, and that drives up a lot of the costs.”

In other words, it’s only naturally for states that previously had relatively light regulations in the heath care sector to have higher percentage increases in premiums when they’re suddenly bombarded with Obamacare’s mass regulations.

5. Obamacare was necessary in order to get rid of “junk” insurance plans. When Obamacare was first being implemented and millions were losing their health coverage, the left argued that it was necessary for people to get health plans that offered more benefits. But as a 2014 Heritage Foundation report noted, these supposedly superior plans offered benefits that people didn’t want or need and were more expensive as a result. This is one of the reasons why premiums and deductibles are soaring.

6. The Obamacare “death spiral” is not backed up by evidence. Hiltzik argued in a February 17 op-ed that a Brookings Institute report found that “that premium increases did not cause dramatic enrollment declines, much less spark a death spiral.” The report itself claims that there was only a “slight decline” in the number of Obamacare sign-ups and claims that there was no correlation between the sign-ups and premium increases. Unsurprisingly, the author of the report served as the chief economist of Barack Obama’s Council of Economic Advisors. Naturally, the report does not reflect reality.

Guy Benson noted at Townhall that the most recent Obamacare enrollment numbers declined from 9.6 million to 9.2 million in a year’s time, far short of the Obama administration’s projections. In another post, Benson pointed out that Humana was exiting the Obamacare exchanges because “it was losing money from taking on too many sick people without enough healthy people to balance the pools.”

Meanwhile, premiums and deductibles are continuing to skyrocket. The Brookings report laughably claims “premiums were on track to reach a roughly sustainable level in 2017,” but this is based on bad economics (H/T: Independent Institute)

It suggests insurers did not learn from 2014 to 2017. Indeed, they became more ignorant of the amount of medical claims to expect. This may be true, as premium hikes averaged five percent in 2015, 10 percent in 2016, and 25 percent in 2017. However, it does not tell us why the CEA thinks the insurers, after having become progressively dumber for Obamacare’s first three years, finally had a Eureka! moment and figured it out this year.

For 2014 through 2016, insurers had special funds (reinsurance and risk corridors) that were supposed to protect them from underpricing. The insurers themselves claimed they would have learned enough in the first three years that future premium hikes would be reasonable. The 2017 hikes show that was not the case.

Worst of all, the CEA suggest the 2017 premium hikes were so high because insurers had to gouge enrollees to fill in the holes they had dug for themselves in the first three years. No! Those losses are sunk costs. If insurers thought 2017 and future years were going to be profitable, they would have priced premiums competitively to win market share.

That is precisely the death spiral that conservatives have been warning about–not enough young people will sign up to pay for the older, sicker people; therefore premiums and deductibles would skyrocket and lead to less signups. This is what has been happening. The only reason why there hasn’t been a full blown death spiral yet is due to Obamacare’s subsidies, but clearly the trend is headed toward that direction.